Global super-cycles have historically coincided with industrialization / re-industrialization in specific sectors. The last occurrence, which lasted almost a decade, was spurred by China’s unprecedented infrastructure stimulus efforts. Are we at the fringes of another super-cycle, this time propelled by global commitment to net-zero carbon emissions and a V-shaped recovery after the COVID-19 pandemic?
Businesses across locations and sectors are witnessing an energy transition. They are rapidly adopting renewable energy-led operations, electric vehicles, and an electrification trend. This transition is likely to have a sharp impact on the mining sector, as it will fuel demand for certain mining commodities, which are critical for energy transition.
As de-carbonization efforts start to accelerate, we expect a substantial increase in demand for commodities that are critical to clean energy, while those linked to traditional high-carbon activities (such as thermal coal) plummet.
So, how can mining businesses realign their models to capitalize on the opportunities presented by a potential mining super-cycle? We recommend:
- Re-evaluate your strategy
- Balance product portfolio based on customer needs, long-term growth plan, and available investment options
- Undertake scenario planning to build a resilient organization
- Consider new business models
- Develop flexible, smaller, modular, and rapidly scalable business models (e.g., invest in smaller, rapidly scalable mines than in building large mines) to reduce risks
- Optimize portfolio
- Engage in continuous portfolio management to not only identify demand signals but also assess investment allocation to secure critical mineral resources
- Create an agile supply chain
- Extend supply network, create alternative supply lines, and re-evaluate inventory strategy to avoid missing out on opportunities stemming from demand variations
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